Inditrade Capital Ltd. (INDITRADECAP) - Director Report

Company director report

Your Directors are pleased to present the 22nd Annual Report of your Company and theAudited Financial Statements of Accounts for the financial year ended 31st March 2016.

Financial Results

(Rs. in crore)

Particulars

Standalone

Consolidated

2016

2015

2016

2015

Total Revenue

22.14

22.97

49.26

40.60

Total Expenditure

18.48

15.35

28.55

25.03

Profit/(Loss)Before Tax

3.65

7.62

20.71

15.57

Finance Cost

0.16

0.16

0.47

0.03

Tax Expense

0.51

0.08

3.41

2.43

Exceptional Item

-

-

-

-

Profit /(Loss) for the period (before minority interest in-case of consolidated)

3.65

7.62

20.71

15.57

Profit /(Loss) after tax and minority interest

3.14

7.54

17.30

13.13

Reserves & Surplus

56.15

53.01

68.88

58.15

Results of Operations

During the year under review the Company along with its subsidiaries provided abouquet of services to its clients. The services include equity broking derivativestrading commodities derivatives trading currency derivatives trading insuranceservices NBFC products like margin funding loan against shares loan againstcommodities. The Company intends to offer more gamut of services to the clients.

On a standalone basis during the year under review your Company had earned revenue ofRs. 22.14 crores as against Rs. 22.97 crores in the previous year. The expenditureincurred was Rs. 18.48 crores as against Rs. 15.35 crores in the previous year resultingin a profit of Rs. 3.14 crores as against profit of Rs. 7.54 crores in previous year.Despite the challenging business environment the Company has continued to be profitableduring the year under reference.

The total consolidated revenue of your Company for the year ended 31st March 2016 wasRs. 49.26 crores as against Rs. 40.60 crores in the previous year and the expenditureincurred was Rs. 28.55 crores as against Rs. 25.03 crores in the previous year whichresulted in a consolidated profit before taxes of Rs. 20.71 crores as against Rs. 15.57crores during the previous year. After tax expense of Rs. 3.41 crores and minorityinterest of Rs.6.57 crores the consolidated profit for the year stood at Rs. 10.73 croresas against Rs. 10.32 crores in the previous year.

Subsidiary Companies

Your Directors present herewith a broad overview of the financials of the Subsidiariesof your Company:

a) Inditrade Derivatives and Commodities Limited

Inditrade Derivatives and Commodities Limited recorded total revenue of Rs. 5.31 croresas against Rs. 5.19 crores during the previous year. The expenditure during the year stoodat Rs. 5.46 crores which resulted in a loss of Rs. 0.14 crores as against a loss of Rs.0.79 crores in the previous year.

b) JRG Fincorp Limited

JRG Fincorp Limited recorded total revenue of Rs.21.87 crores as against Rs.12.60crores during the previous year. The expenditure during the year stood at Rs.3.73 croreswhich resulted in a profit of Rs.18.13 crores before tax. The profit after tax for theyear stood at Rs.15.28 crores as against profit of Rs.6.91 crores during the previousyear.

c) Inditrade Business Consultants Limited

Inditrade Business Consultants Limited recorded a loss before tax of Rs. 1.33 Croresas against a profit of Rs. 0.04 crores during the previous year. The loss after tax stoodat Rs. 1.37 crores as against a loss of Rs. 0.02 crores during the previous year.

d) Inditrade Insurance Broking Private Limited

Inditrade Insurance Broking Private Limited recorded revenue of Rs. 0.62 crores asagainst Rs. 0.23 crores in the previous year. The total expenditure stood at Rs.0.52crores which resulted in a profit of Rs.0.1 crores before tax. The profit of the Companyafter tax stood at Rs.0.1 Crore as compared to the loss after tax of Rs.0.13 crores in thecorresponding previous year.

ACCOUNTS OF SUBSIDIARIES

During the year the Board of Directors (including Audit Committee) reviewed theaffairs of the Subsidiaries and the salient features of the financials of SubsidiaryCompanies are provided in the prescribed format AOC -1 attached as Annexure-1.

The Annual Audited Accounts of the Subsidiary Companies and the related detailedinformation will be made available to the shareholders of the Company at the RegisteredOffice of the Company and on the Company website www.inditrade. com. The Company shallfurnish a hard copy of the detailed accounts of the subsidiaries to any shareholder ondemand.

Recent Developments

The Company identified the growth and huge potential offered by the Microfinancebusiness and has decided to foray into the Microfinance business. The Board of Directorsat its meeting held on 29th April 2016 decided to invest in Tree Microfinance Limited(CIN: U67190TN2016PLC103904) a Company incorporated on 29th January 2016 under theCompanies Act 2013 having its registered office at 15 Padmanaba Street T. NagarChennai Tamil Nadu India - 600017. The Company acquired 3685000 (Thirty Six LakhEighty Five Thousand) equity shares of Rs 10 each in Tree Microfinance Limited(constituting 67% of Paid up Capital) thereby making it the Subsidiary of the Company.Subsequently the name of Tree Microfinance Limited was changed to Inditrade MicrofinanceLimited.

Reclassification of Promoters

Mr. Sudip BandyopadhyayM/s. Juno Moneta Technologies Private Limited and M/s.A. T.Invofin India Private Limited (Acquirers) entered into the Share Purchase Agreement (SPA)dated 7th September 2015 with M/s.Duckworth Limited and M/s.Baring India Private EquityFund III Listed Investments Limited (Sellers) the Promoters of the Company to acquire11380000 (One Crore Thirteen Lakh Eighty Thousand) Equity Shares at a price of Rs 42.50(Rupees Forty Two and Fifty Paise Only) per Equity Share of the Company. Pursuant to theexecution of the SPA the Acquirers made an Open Offer to all Public Shareholders inaccordance with Regulation 3(1) and 4 of the SEBI (SAST) Regulations 2011 to acquire upto6113445 (Sixty One Lakh Thirteen Thousand Four Hundred Forty Five) Equity Sharesconstituting 26% (Twenty Six Percent) of the Share Capital of the Company at an offerprice of Rs 42.50 (Rupees Forty Two and Fifty Paise Only) per Equity Share. In accordancewith the SPA and Open Offer the Acquirers shall be classified as the promoters of theCompany replacing the existing promoters subject to the approval of the shareholders asper Regulation 31A of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015.

Consequent the above the Acquirers have acquired 16744461 (One Crore Sixty SevenLakh Forty Four Thousand Four Hundred Sixty One) equity shares constituting 71.70% of thetotal share capital of the Company. The Board of Directors of the Company wasreconstituted with the nominees of the Acquirers on 15th February 2016 and the thenexisting Board Members resigned from the Board. Thereafter M/s Duckworth Limited andBaring India Private Equity Fund III Listed Investments Limited vide letters dated 14thMarch 2016 had requested for declassification as promoters of the Company.

As per Regulation 31A of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 approval of the shareholders in the general meeting is required forclassifying Mr. Sudip Bandyopadhyay M/s.Juno Moneta Technologies Private Limited andM/s.A.T.Invofin India Private Limited as the Promoters of the Company and forreclassifying M/s Baring India Private Equity Fund III Listed Investments Limited underthe Public category.

The Board recommends the same to the Shareholders of the Company.

Reserves

During the year under review your Company transferred Rs. 3205125/- to the GeneralReserve. No amount from profit was transferred to the reserves during the financial yearunder review.

Dividend

The Board of Directors do not recommend any dividend to the shareholders for thefinancial year 2015-2016 since the surplus is intended to be ploughed back into thebusiness for its future expansion plans.

Details of Utilization Of IPO Proceeds:

Particulars

Envisaged in theprospectus

Change in utilization*

Amount utilized till 31.03.2015

Utilized during the year ended 31.03.2016

Total fund Utilized(Including change in utilization)

Amount remaining to be utilized

Middle East Operations

560.00

(366.66)

193.34

-

193.34

-

Technology Upgradation

Computer Software

160.00

-

110.00

-

110.00

-

Computer Hardware

50.00

-

50.00

-

Regional Office

600.00

-

628.81

-

628.81

-

Issue Expenses

130.00

-

147.86

-

147.86

-

Opening new branches in India

-

200.00

144.00

11.37

155.37

44.63

Infrastructure development for i-trade

-

40.00

15.47

-

15.47

24.53

Other infrastructural requirements.

-

126.66

126.66

-

126.66

-

Total

1450.00

-

1416.14

11.37

1427.51

69.16

Means of Finance

Issue Proceeds

1380.84

Internal Accruals

46.67

Total Utilized

1427.51

*In the Annual General Meeting of the Company held on 25th July 2009 the shareholdershad consented for the change in the utilization of the aforesaid monies totaling toRs.366.66 Lakhs raised by the Company during the IPO of its shares from those specifiedin the object clause in the prospectus inter alia to utilise for expansion activities ofthe Company in India for opening new branches infrastructure development for I-Trade andother infrastructure requirements.

Extract Of Annual Return

The extract of the Annual Return as provided under subsection (3) of section 92 of theCompanies Act 2013 in Form

MGT-9 is attached as Annexure II.

Corporate Governance

The Company is committed to maintain the highest standards of corporate governance andadhere to the corporate governance requirements set out by Securities and Exchange Boardof India (SEBI). The Company strives to achieve fairness for all stakeholders and toenhance long term shareholder value.

As per Regulation 34 (3) and 71 (2) read with Schedule V of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 a separate section onCorporate Governance practices followed by the Company together with the certificate fromM/s BVR & Associates Kochi Practicing Company Secretary LLP conforming complianceforms an integral part of this Report.

Corporate Social Responsibility

During the financial year 2015-2016 the Corporate Social Responsibility Committee (CSRCommittee) was constituted comprising Mr. P Viswanathan Ms. Debanshi Basu and Mr. MunishDayal as members. On 15th February 2016 the Committee was reconstituted with Ms. JhumaGuha Mr. K.A Somasekharan and Mr. B G Daga as members. The Committee during the financialyear formulated and approved Corporate Social Responsibility Policy (CSR Policy)indicating the activities to be undertaken by the Company. The Committee was assigned withmonitoring the implementation of the framework of the CSR Policy and recommending theamount to be spent on CSR activities. As per the recommendations of CSR committee theprofits of the Company and the amount to be spent on CSR activities as per Section 135 ofthe Companies Act 2013 were insufficient to initiate any significant project. The Boardagreed with the recommendations of the CSR Committee and decided that in the forthcomingfinancial year suitable project shall be identified and implemented for CSR initiatives.A report on Corporate Social Responsibility is attached as Annexure III.

The CSR Policy is also available on the Companys website in the below mentionedlink. (Ref: http://www.inditrade.com/ Pdf/CSR_Policy_ICL.pdf)

Board Meetings

The Board Meetings of the Company were held with requisite notice and with a validquorum. The Board met 7 (Seven) times in the financial year 2015-16 on 20th May 2015 10thAugust 201515th September 2015 09th November 2015 05th February 2016 15th February2016 and 08th March 2016. The maximum interval between the two meetings did not exceed 120days. Details of the composition of the Board Meetings held attendance of the Directorsat such Meetings and other relevant details are provided in the Corporate GovernanceReport which forms part of the Annual Report.

Committees Of The Board

The Board of Directors has the following Committees:

1. Audit Committee

2. Nomination and Remuneration Committee

3. Stakeholders Relationship Committee

4. Corporate Social Responsibility Committee

The details of the Committee along with their composition number of meetings andattendance at the meeting are provided in the Corporate Governance Report.

Criteria for Determining Qualifications

Positive Attributes and Independence of a Director

The Company had devised a policy for performance evaluation of the Chairman individualDirectors Board and its Committees which also includes criteria for appointment andremuneration of Directors including Independent Directors Key Managerial Persons andSenior Management. The Nomination and Remuneration policy was framed in accordance withSection 178 of the Companies Act 2013 and Clause 49 of the Listing Agreement (nowreplaced by SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015). TheCompany has constituted a Nomination and Remuneration Committee for overseeing andimplementing the Nomination and Remuneration policy. The composition of the Nomination andRemuneration Committee and other relevant details are provided in the Corporate GovernanceReport. The Nomination and Remuneration Committee is responsible for developing competencyrequirements for the Board based on the industry and strategy of the Company.

The Nomination and Remuneration Policy spells out the criteria for determiningqualifications positive attributes independence of a Director and the policy onremuneration of Directors KMP and senior management employees including functional heads.The Nomination and Remuneration policy is attached as Annexure IV and is also available onthe Companys website. (Ref: http://www.inditrade.com/Pdf/Inditrade_Capital-Remuneration_Policy.pdf)

Selection and procedure for nomination and appointment of Directors

The Nomination and Remuneration Committee is responsible for identifying persons whoare qualified to become directors and who may be appointed in senior management inaccordance with the criteria laid down in the Nomination and Remuneration Policy. TheCommittee shall also recommend to the board the appointment of any new Directors orremoval of the existing Directors. The Committee shall recommend to the Board as towhether to extend or continue the term of appointment of the independent directors on thebasis of the report of performance evaluation of Independent Directors. After carefullyevaluating and analyzing the recommendations of the Nomination and Remuneration Committeethe Board of Directors of the Company shall decide whether to appoint a new Director orremove an existing Director as the case may be.

Evaluation by Board of its performance and that of its committees and individualdirectors;

The Board has carried out an annual performance evaluation of its own performance thedirectors individually as well as the evaluation of the working of the Committees of theBoard. The Board performance was evaluated based on inputs received from all the Directorsafter considering criteria such as Board composition and structure effectiveness of Board/ Committee processes and information provided to the Board etc. The Board and theindividual Directors has also evaluated the performance of Independent and Non-independentDirectors performance of the Board as a whole and that of the Chairman.

Directors and Key Managerial Personnel

The Board of your Company consisted of four Directors at the beginning of the financialyear namely Mr. Munish Dayal Ms. Debanshi Basu Mr. B R Menon and Mr. P Viswanathan.During the year under review the members approved the appointment of Mr. Vinod Mohan theCompany Secretary also as the Manager of the Company for a period of 2 years with effectfrom 11th November 2014.

The Directors pursuant to the open offer made by the Acquirers decided to resign fromthe Board as agreed with the Acquirers. Accordingly Mr. Munish Dayal Ms. Debanshi BasuMr. B R Menon and Mr. P Viswanathan resigned from the Board with effect from 15thFebruary 2016 and the new Directors Mr. B G Daga (Non executive Independent Director)Mr. K A Somasekharan (Non executive Independent Director) Ms. Jhuma Guha (Non executiveDirector) and Mr. Giri Krishnaswamy (Non executive Director) were appointed. The presentBoard places on record its deep appreciation for the valuable contribution made byerstwhile Board during their tenure.

Members are requested to refer to the Notice of the Annual General Meeting and theExplanatory Statement for relevant details including qualifications and experience of theDirectors and the period of their appointment.

Key Managerial Personnel

The following are the Key Managerial Personnel of the Company:

 Mr. Vinod Mohan - Manager & Company Secretary

 Ms. Geniya Banerjee - Chief Financial Officer

Declaration by Independent Directors

The Independent Directors of the Company have given declarations that they meet thecriteria of independence as laid down under Section 149(6) of the Companies Act 2013 andRegulation 16 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015.

Employee Stock Option Plan (Esop)

In order to attract and retain talent in the Company ESOP scheme (JRG ESOP 2008) is inplace. This will encourage our employees to participate in the growth of the Company. TheSecurities and Exchange Board of India introduced the Securities and Exchange Board ofIndia (Share Based Employee Benefits) Regulations 2014 ("SEBI ESOPRegulations") on October 28 2014. The Company plans to substitute and makemodifications to the existing ESOP scheme and the JRG ESOP Trust constituted to administerthe scheme to bring the same in line with the Companies Act 2013 and SEBI (Share BasedEmployee Benefits) Regulations 2014. The old and the proposed new scheme are available atthe Company Website at www.inditrade.com.

Disclosure as per Rule 11 (9) of the Companies (Share Capital and Debentures) Rules2014 and SEBI (Share Based Employee Benefits) Regulations 2014 thereon is annexed to thisreport as Annexure V.

Disclosure as required under Regulation 14 of SEBI Circular - CIR/CFD/POLICYCELL/2/2015 dated 16th June 2015 has been made available at the Company Website at www.inditrade.com.

Fixed Deposits

During the year your Company did not accept/renew any deposits within the meaning ofChapter V of the Companies Act 2013 and the rules made there under.

Particulars of Employees

No employee of the Company was in receipt of remuneration exceeding the amountprescribed under Section 197 of the Companies Act 2013 read with Rule 5 of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014.

The details/ particulars of employees referred to in Rule 5 of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 is attached as AnnexureVI.

Particulars of Loans Guarantees or Investments

The details of Loans Guarantees or Investments covered under the provisions of Section186 of the Companies Act 2013 are given in the note-10 to Financial Statements.

Particulars of Contracts or Arrangements With Related Parties

All contracts/ arrangements/ transactions entered by the Company during the financialyear were in compliance with the applicable provisions of the Companies Act 2013 theListing Agreement and the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015. There are no materially significant Related Party Transactions made bythe Company with Promoters Directors Key Managerial Personnel or other designatedpersons which may have a potential conflict with the interest of the Company at large.

All Related Party Transactions were placed before the Audit Committee as also the Boardfor approval. Prior omnibus approval of the Audit Committee was obtained for thetransactions which were of a repetitive nature. The transactions entered into pursuant tothe omnibus approval so granted were reviewed and statements giving details of all relatedparty transactions were placed before the Audit Committee and the Board of Directors fortheir approval on a quarterly basis.

The Company has framed a Related Party Transactions Policy. The Policy as approved bythe Board is uploaded on the Companys website (URL: http://www.inditrade.com/Pdf/Inditrade_RPT_Policy.pdf).

Particulars of contracts or arrangements with related parties referred to in subsection (1) of section 188 in Form No. AOC 2 of the Companies (Accounts) Rules 2014 isattached as Annexure VII.

Management Discussion and Analysis Report

As stipulated under Regulation 34 of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 Managements discussion and analysis is presentedin a separate section forming part of the Annual Report.

Statutory Auditors

M/s. Haribhakti & Co. LLP Chartered Accountants Chennai was appointed as theStatutory Auditors of the Company to hold the office from the conclusion of the 20thAnnual General Meeting held on 26th September 2014 till the conclusion of fourthconsecutive Annual General Meeting to be held in the year 2018. Ratification ofappointment of Statutory Auditors is being sought from the Members of the Company at thisAGM.

The Company has received letters from M/s. Haribhakti & Co. LLP CharteredAccountants to the effect that their appointment if made would be within the prescribedlimits under Section 141(3) of the Act and that they are not disqualified from appointmentas statutory auditors of the Company.

There are no audit qualifications reservations or adverse remarks from the StatutoryAuditors during the year under review.

Secretarial Audit

M/s. SVJS & Associates Practicing Company Secretaries Kochi was appointed toconduct the Secretarial Audit of the Company for the financial year 2015-2016 as requiredunder Section 204 of the Companies Act 2013 and the rules made thereunder.

The Secretarial Audit Report for the financial year 2015-2016 forms a part of theAnnual Report and is attached as Annexure VIII.

Considering the nature of activities of the Company the information required underSection 134(3)(m) of the Companies Act 2013 read with Companies (Accounts) Rules 2014relating to Energy Conservation Technology Absorption is not applicable. However theeffort made by the Company towards technology absorption includes the following:

I. Adoption of the latest state of-the-art Datacentre software and hardware toolsavailable in the market for rendering stock-broking and other services more efficientlyand effectively.

II. Implemented Server virtualization to reduce the Server Power and Management footprints.

III. Implemented the Log management to identify detailed server network andapplication issues and proactively clear them so that it will not affect the tradingplatform.

The Company had no foreign exchange earnings or outgo during the period under review.

Internal Financial Control and Its Adequacy

The Company has an effective internal control and risk mitigation system which isreviewed and constantly updated. The internal controls including the internal financialcontrol of the Company are managed and reviewed by the Audit Committee and apart from thestaffs employed by the Company the Company has also appointed Internal Auditors outsidethe Company to review and monitor the internal financial control and its adequacy. Theinternal financial controls are adequate and commensurate with the size and nature ofbusiness of the company.

Risk Management

The Company has framed and implemented a Risk Management Policy to assist the Board in

(b) overseeing that all the risks that the organization faces such as strategicfinancial credit market liquidity security property IT legal regulatoryreputational and other risks have been identified and assessed.

The Policy is reviewed and approved by the Board. The Company manages monitors andreports on the principal risks and uncertainties that can impact its ability to achieveits strategic objectives. The Company also conducts external research to identify externalthreats internal audit and internal surveys to identify internal risks.

The Risk Management Policy has been uploaded to the Companys website and is alsoavailable for verification at the below mentioned link. (Ref:http://www.inditrade.com/Pdf/ Risk_Managment_Policy_ICL.pdf) Vigil Mechanism/ WhistleBlower Policy

Inorder to address the genuine concerns and grievances of the Directors and Employeesof the Company the Company has established a vigil mechanism/ Whistle Blower Policy fordirectors and employees pursuant to Section 177(9) of the Companies Act 2013 andRegulation 22 of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.The Vigil Mechanism provides adequate safeguards against victimization of Director(s) orEmployee(s) or any other person who avail the mechanism and also provide for direct accessto the chairperson of the Audit Committee in appropriate or exceptional cases.

The Vigil Mechanism is available in the website of the Company in the link:http://www.inditrade.com/Pdf/Vigil%20 Mechanism%20Whistle%20Blower%20Policy_Inditrade.pdf

The Company has in place the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) policy in line with the requirements of the Sexual Harassmentof Women at Workplace (Prevention Prohibition and Redressal) Act 2013. InternalComplaints Committee (ICC) has been set up to redress any complaint regarding sexualharassment.

The following is a summary of sexual harassment complaints received and disposed offduring the year 2015-16:

 No of complaints received: NIL

 No of complaints disposed off: NIL

Directors Responsibility Statement

In accordance with the provisions of Section 134 (5) of the Companies Act 2013 theBoard of Directors affirm:

(a) That in the preparation of the annual accounts for the financial year ending 31stMarch 2016 the applicable Accounting Standards had been followed and there are nomaterial departures.

(b) That the Directors have selected such accounting policies and have applied themconsistently and made judgments and estimates that were reasonable and prudent so as togive a true and fair view of the state of affairs of the Company as on 31st March 2016and of the profit of the Company for the year ended on that date.

(c) That the Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of this Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities.

(d) That the Directors have prepared annual accounts for the financial year ended 31stMarch 2016 on a 'going concern basis.

(e) That the Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and are operatingeffectively.

(f) That the Directors have devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems are adequate and operatingeffectively.

Acknowledgments

Your Directors place on record their sincere appreciation for the assistance andguidance provided by the regulators stock exchanges other statutory bodies andCompanys bankers for the assistance cooperation and encouragement extended to theCompany. Your Directors wish to place on record their appreciation for the contributionsmade by the employees at all levels and whose efforts hard work and support areinexplicable for the Company. Your involvement as shareholders is also greatly valued.Your Directors look forward to your continuing support.